Morgan Stanley, an adviser to Valeant Pharmaceuticals International Inc in its $53 billion hostile bid for Allergan Inc, initially tried to get hired by Allergan and in its pitch called the unsolicited bidder a "house of cards", according to Allergan.
The Botox maker released email exchanges with Morgan Stanley bankers on Monday, which reveal the bankers were pitching for a defense assignment from Allergan, offering advice as to how the company could successfully defend the unwanted suitor.
"Executives from Morgan Stanley, the investment bank understood to have recently been retained by Valeant, have sent emails directly to Allergan's management team that suggest they share the concerns of Allergan...," the company said in a statement.
In a May 13 email to Allergan Chief Executive David Pyott and Chief Financial Officer Jeff Edwards, Morgan Stanley's global head of M&A Robert Kindler said the company could be more aggressive in going after Valeant's business model and the value of its stock.
David Horn, a managing director at Morgan Stanley's healthcare group, followed up with an email to Edwards on May 18.
"Part of what Rob (Kindler) is suggesting (to Allergan) is to allow him to use his significant relationships with media and analysts to provide a clear and detailed articulation of why Valeant is a house of cards and your investors should not want to take their stock," Horn said.
Representatives of Morgan Stanley did not immediately respond to requests for comment, while Allergan declined to comment. Valeant could not be immediately reached for comment.
Valeant and its ally Pershing Square Capital Management - Allergan's biggest shareholder - have offered to buy Allergan for $53 billion in cash and shares. Allergan has rejected the offer and refused to negotiate, leading Pershing to move toward replacing most of Allergan's board at a special meeting.
However, Valeant's Toronto-listed stock has fallen in recent weeks, with Allergan stepping up its attack on the rival's business model. Shares of Valeant have fallen nearly 7 percent in the last five days, while the S&P 500 has remained flat.
Allergan has argued that Valeant shuns research and development and relies solely on acquisitions to drive growth, a model which it calls unsustainable. Allergan has compared Valeant to Tyco, the scandal-plagued company which built itself up through acquisitions and then collapsed.
Valeant has defended itself, with Ackman arguing that the company's business model is more similar to Warren Buffett's Berkshire Hathaway Inc than to Tyco.
Allergan is working with Goldman